On December 18, 2018, officials announced that Germany-based automotive system maker IAV GmbH  (“IAV”) has agreed to plead guilty to one felony count and pay a $35 million criminal penalty in connection with its role in Volkswagen AG’s (“VW’s”) use of so-called “defeat device” software to improve performance on U.S. emissions tests.  According to court filings, starting in 2006, IAV worked with VW to design, test, and implement this software in VW- and Audi-branded diesel vehicles to recognize when vehicles were connected to emissions testing equipment and adjust emissions-control systems accordingly.  Authorities maintain that IAV managers knew the purpose of the defeat devices and how they were used by at least 2008, and caused this software to be installed on approximately 335,000 vehicles sold by VW in the United States.  IAV has agreed to plead guilty to one count of conspiracy to defraud the United States and U.S. customers of VW and to violate the Clean Air Act.  In addition to the $35 million penalty, IAV has agreed to serve two years of probation, to operate under the oversight of an independent compliance monitor for two years, and to cooperate fully in ongoing DOJ investigations and prosecutions of responsible individuals.

United States v. IAV GmbH, No. 16-cr-20394 (E.D. Mich.)

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